Inventory of current early LSDFi potential projects

Original Author: Yuuki, LD Capital

Preface:

LSD; The track has been repeatedly hyped, and the market has already had a high degree of understanding and corresponding attention to the track. LSD; There is no doubt about the certainty of the future development of the track, but the mainstream targets are facing weaker marginal changes. The high certainty makes the market almost no effective expectation difference and provides trading opportunities with high odds. At this time, due to the continuous expansion of the underlying "LST" interest-bearing asset, the "LSDFi" new protocol built on this asset will become the alpha of the entire "LSD" track.

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The "LSDFi" protocol introduced in this article is concentrated in two categories. The first category is based on "LST" as collateral; CDP; WrapETH; protocol. The reason for focusing on these two types of products is: as the pledge rate of "ETH" continues to rise, the scale of ETH; continues to decrease, and the scale of LST; continues to expand; The market demand for lending agreements will inevitably continue to expand, especially when the market picks up and the risk appetite of funds increases.

Lending agreements are usually divided into two types, one is the deposit-absorbing and lending model (such as; AAVE; and; Compound), but this model requires user deposits on the capital side, and the network effect and brand effect created by the first-mover advantage have obvious The moat makes it difficult for backward protocols to compete with it, and at the same time, the model also faces the problem of high lending rates. The other is the "CDP" coinage model (for example; Dai), which does not have user fund custody at the capital end. Due to the protocol's own coinage rights, users can enjoy extremely low borrowing rates, and the cost of the protocol is determined by the bilateral interest rate Subsidies are converted into liquidity expenditures for mortgage certificates; this model is more suitable for the construction of a loan agreement based on the "LST" interest-earning asset, especially based on the increase in leverage based on interest rate exposure.

Source: LD Capital

The following "LSDFi" are all early projects, and the product planning, function realization and economic model of most targets need to be continuously tracked.

The first category: ;LST; as collateral; CDP; US dollar stablecoin agreement

1. Prisma Finance: Curve; ecological support, Liquity Fork

product description:

The main function of Prisma Finance; is to use "LST" assets as collateral, and over-mortgage to cast USD stable currency; acUSD, the first batch of online support; wstETH, cbETH, rETH, sfrxETH; and; WBETH; as collateral. At present, "Curve" founder, Convex; founder, FRAX Finance, Coingecko, OKX Ventures; etc.; Defi OG; support; according to; FRAX [FIP-227;] proposal, FRAX Finance; to; Prisma Finance; Invested at a valuation of $30 million; $100,000, token distribution will be linearly unlocked within 12 months.

Features:

Like most over-collateralized stablecoin protocols, Prisma Finance; solves the core requirement of capital efficiency, and users can mint stablecoins in the way of "CDP" while retaining the "LST" price fluctuation and yield exposure Achieve leverage. In this link, the liquidity of "acUSD" is very important, which is the main agreement cost of "CDP" agreement, and also the biggest advantage of "Prisma Finance".

Economic model:

In terms of token economic model, Prisma Finance; introduces; ve; model, veToken; will obtain the governance rights of the agreement to determine the distribution of tokens in different lending pools, agreement rates, pool parameters and; LP; mining yield , which aims to attract the "LSD" agreement (asset issuer) and "LP" to lock the agreement tokens, forming interest binding and reducing secondary market selling pressure.

2. Raft: user-friendly, anti-censorship, real-name team, backed by; Balancer; ecological construction fluidity

product description:

Raft; is an immutable, decentralized lending protocol that allows users to lend USD stablecoins with; LST (currently supported; stETH) as collateral; R; through immutable smart contracts and decentralized front-end to keep the protocol censorship-resistant. Raft; Incubated by; TempusFinance; Co-founder; Worked for; ETH; Foundation, team members have also developed; Nostrafinance (StarkNet; the first lending product on StarkNet). Raft has obtained the support of Lemniscap, Wintermute, GSR and other institutions. At present, the main product functions have been realized and the TVL has reached 30 million US dollars (without token incentives).

Source: Capital

Features:

The feature of the product lies in the flash swap and one-step leverage function: the principle of flash swap is similar to "AAVE;'s flash loan, the difference is that; R; comes from the protocol minting; and on the basis of the flash swap function, one-step leverage function can be developed , that is, the user deposits; stETH → flash exchange; R → use; R; exchange; stETH → deposit additional; stETH → generate; R → pay off; While improving the user experience, it greatly saves transactions; Gas; users can obtain up to "11" leverage.

Source: Capital

Economic Model: Unpublished

3. Gravita Protocol: Liquity Fork, LST; as collateral; CDP; stable currency agreement

product description:

Gravita Protocol; is the first stablecoin protocol to adopt; Liquity; fork support; LST; , rETH; in; bLUSD; as collateral, its stablecoin; GRAI; in; Curve, Bunni; and; Uni; V3 has good liquidity depth.

Features:

Compared with "Liquity, Gravita", in addition to supporting "LST" assets, it also has a lower borrowing rate; users need to pay "0.5%" in advance for borrowing in "Gravita". For repayment within the month, Gravita; will refund the borrowing fee according to the loan period, and the user will be charged at least; 1; week's borrowing fee.

Source: Defillama, LD Capital

Economic Model: Unpublished

4. PSY: ;0; borrowing rate, Arbitrum; ecology, ve(;3,;3), Liquidity Fork

product description:

PSY; supports a variety of; LST; and its; LP; tokens as collateral to mint USD stablecoins (SLSD). The product structure is the same as that of "Liquity; and will be launched on the "Arbitrum" chain in the future.

Features:

PSY; will provide; 0; interest rate borrowing and introduce the token model of ;ve(;3,;3), the specific details need to be tracked continuously.

The second category: the ;CDP WrapETH; agreement with ;LST; as collateral

5. ZeroLiquid: ;0; Borrowing rate, no liquidation, automatic repayment of debt with interest

product description:

ZeroLiquid; is currently in the testnet stage, allowing users to stake; LST; minting; ZETH (when users deposit; ETH;, ZeroLiquid; will convert it to; LST, initial; LTV; 50%;), ZETH; is the price The loan certificate anchored to "ETH", because it has price fluctuations in the same direction as "ETH", so it does not consider the risks of the underlying "LST" assets from the "LSD" agreement (hacking, a large amount of capital confiscation, etc.) , ZeroLiquid; can achieve no liquidation, hedging the risk of price fluctuations, long; ETH; pledged interest rate exposure. ZeroLiquid; the initial plan to charge; LST; the rate of return; 8%; as the income of the agreement, the subsequent proportion can be adjusted through governance.

Source:zeroliquid.gitbook.io,LD Capital

ZeroLiquid; The current problem is how low; LTV, higher protocol pumping and; ZETH; how to anchor; among them, "LTV; and protocol pumping can be adjusted through governance, and the main problem at present is focused on "ZETH; if anchoring is achieved. In the "ZeroLiquid" economic model, the liquidity incentive cost accounts for "20%" (lower) of the total amount of tokens, which requires a good redemption mechanism to maintain the stability of the "ZETH/ETH" exchange rate.

Currently; ZeroLiquid; through the "Steamer" module to provide liquidity for discount arbitrage in the secondary market, the liquidity of the Steamer; module comes from the collateral of the user's excess mortgage and the income generated by the collateral, this design largely affects Agreement; LTV, pay attention to whether it will improve in the future.

Source:zeroliquid.gitbook.io,LD Capital

Economic model:

$ZERO;Tokens will be launched on the Uniswap platform in the form of self-raised funds on March 19th, the total amount of tokens will be 3050 million pieces (initial total amount of 100 million pieces, after the community proposal Destroyed; 69.42%;), of which; 600; million pieces were used to provide initial liquidity,; 1370; million pieces belonged to the community, ; At present, the circulation in the secondary market is 6.9 million pieces, and the rest will be gradually vested within 3 months to 3 years. $ZERO; has the right to share dividends while enjoying governance rights, and single currency pledge can capture protocol income.

Source:zeroliquid.gitbook.io,LD Capital

6. Ion Protocol:; 0; borrowing rate, support; EigenLayer; re-pledged certificate

product description:

Ion Protocol; supports multiple collaterals, including; LSTs, LST LP Positions, Staked LST LP Positions, EigenLayer Validator/LST/LST LP Restaking Positions; and; LST Index Products. At the same time, "Ion Protocol" intends to customize the risk model of this agreement according to the inherent risk-return structure of different collaterals, and guide user deposits by adjusting different collaterals; LTV; or borrowing interest rates, and guarantee while improving capital efficiency as much as possible; allETH ; overcollateralization and anchoring.

Source: ionprotocol.medium, LD Capital

Economic Model: Not released